Seven-Year Treasury Notes Recover After Auction

By Johanna Bennett

Treasury seven-year notes recovered earlier losses after the U.S. sold $29 billion of the issues in the last of four bond auctions this week.

The auction saw record high demand from direct bidders, according to MarketWatch. The web site reported:

The Treasury Department sold $29 billion in 7-year debt at a yield of 2.258%, the highest yield since December. Bidders offered to buy 2.59 times the amount of Treasury notes sold, compared to an average of 2.55 times in the last six auctions.Direct bidders took nearly one third, buying 32.6% versus an average of 19.9%. “It’s a historical high,” said Stanley Sun, an interest-rate strategist at Nomura. He noted that while 7-year auctions have only existed since early 2009, the nearly one-third taken by direct bidders is considered high in most auctions. Indirect bidders bought 41.4%, compared with 41.5% in recent sales. An auction of five-year notes on Wednesday also saw record demand.

The price on the seven-year treasury rose 2/32, which sent the yield down to 2.24%. Bond yields move inversely to prices. The yield had been higher before today’s auction.